At the day’s close, US stock indices retreated from highs reached earlier this week. The Dow fell by 0.25%, the Nasdaq by 0.26% and the S&P 500 by 0.17%. The S&P 500’s decline broke a three-day streak of gains.
Thursday, August 28, 2014
Russian aggression toward Ukraine was the likely source of market weakness. Better-than-expected second-quarter gross domestic product growth could not push the indices into positive territory.
Ukraine conflict escalates
Russia has come under fire for mounting an invasion in Ukraine, according to the New York Times. Although Russian authorities vehemently deny any direct involvement with rebel forces, US and Ukrainian intelligence confirmed the supply of Russian tanks and personnel carriers that entered Ukraine through the uncontrolled border.
During an emergency UN Security Council meeting, Western allies admonished Russia for its conniving behavior. “Instead of listening, instead of heeding the demands of the international community and the rules of the international order, at every step, Russia has come before this Council to say everything except the truth,” Samantha Power, the United States ambassador, told the New York Times. “It has manipulated. It has obfuscated. It has outright lied. So we have learned to measure Russia by its actions and not by its words.”
Second-quarter data reveals GDP growth
The Commerce Department released a report today indicating greater second quarter economic growth than originally anticipated, according to Bloomberg. Gross domestic product rose at a 4.2% annual rate. Economists had estimated a 4% gain.
Bob Landry, executive director at USAA Investment Management Co. in San Antonio, expressed optimism in report’s effect on the market. He told Bloomberg that while global crises are negative influences, they tend to be short-lived, and the market usually recovers.
Holiday weekend a factor as well
One other aspect of the market decline is the impending Labor Day weekend. Bloomberg asserted that the market is observing the slowest trading in six years as investors take off early for the long weekend. Combined with the political risks, volume is abnormally light.
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